Key Takeaways:
- Cardano’s ADA has turned bearish after failing to hold the $0.71 support level, with technical indicators pointing to further downside.
- Declining development activity and ongoing token distribution raise concerns for long-term ADA investors.
Cardano’s native token ADA has struggled to maintain upward momentum since late May, with bearish signals stacking up across multiple key metrics.
The cryptocurrency initially posted a promising 46% gain earlier this year when Bitcoin [BTC] surged from $76,000 to $111,600 between April and May. However, ADA’s rally failed to break past the long-standing six-month range, exposing the altcoin to renewed selling pressure.
Weak Market Structure Signals More Downside Ahead
According to AMBCrypto’s recent analysis, Cardano’s market structure flipped bearish on May 30, after the token slipped below the $0.71 support level. This breakdown set $0.51 as the next key target for bears. A move below this level, followed by a retest as resistance, could offer short-sellers an opportunity to target further declines toward $0.427.
The current technical picture suggests that any bounce in ADA’s price could be short-lived. The sellers appear dominant, and with no strong bullish momentum visible at the time of writing, the prospect of a sustained recovery remains remote.
Falling Development Activity and Network Distribution Add to Investor Concerns
On-chain data from Santiment indicates additional headwinds for Cardano. While daily active addresses have held relatively steady, the network’s development activity has been trending downward since February — a concerning signal for long-term investors focused on the project’s growth potential.
Also Read: ADA Price Outlook: Why Cardano Could Jump 10% from Current Levels
Meanwhile, the 90-day Market Value to Realized Value (MVRV) ratio has remained positive for nearly two months, suggesting recent holders are still in profit. However, the falling number of profitable addresses could lead to increased selling pressure as traders exit at break-even or small gains.
The mean coin age, which reflects the holding time of ADA tokens, is also on a downtrend — indicating ongoing network-wide distribution rather than accumulation. Without a reversal in this trend and an uptick in demand, a bullish reversal for ADA seems unlikely.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
